Correlation Between Cincinnati Financial and Erste Group
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Erste Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cincinnati Financial and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial Corp and Erste Group Bank, you can compare the effects of market volatilities on Cincinnati Financial and Erste Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cincinnati Financial with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Erste Group.
Diversification Opportunities for Cincinnati Financial and Erste Group
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cincinnati and Erste is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial Corp and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank and Cincinnati Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cincinnati Financial Corp are associated (or correlated) with Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Erste Group go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Erste Group
Assuming the 90 days trading horizon Cincinnati Financial is expected to generate 1.24 times less return on investment than Erste Group. In addition to that, Cincinnati Financial is 1.4 times more volatile than Erste Group Bank. It trades about 0.06 of its total potential returns per unit of risk. Erste Group Bank is currently generating about 0.1 per unit of volatility. If you would invest 2,530 in Erste Group Bank on August 30, 2024 and sell it today you would earn a total of 2,593 from holding Erste Group Bank or generate 102.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.75% |
| Values | Daily Returns |
Cincinnati Financial Corp vs. Erste Group Bank
Performance |
| Timeline |
| Cincinnati Financial Corp |
| Erste Group Bank |
Cincinnati Financial and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Erste Group
The main advantage of trading using opposite Cincinnati Financial and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Erste Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Erste Group will offset losses from the drop in Erste Group's long position.| Cincinnati Financial vs. Lendinvest PLC | Cincinnati Financial vs. Neometals | Cincinnati Financial vs. Albion Technology General | Cincinnati Financial vs. Jupiter Fund Management |
| Erste Group vs. Lendinvest PLC | Erste Group vs. Neometals | Erste Group vs. Albion Technology General | Erste Group vs. Jupiter Fund Management |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |